How to Better Your Financial Literacy
How is your financial literacy? Can you balance a checkbook or write a budget? Do you know how to read a credit report? How “literate” are you when it comes to your credit?
In honor of Financial Literacy Month, zendough.com commissioned a survey and found:
With those results, we figured it might be time for a quick refresher about credit.
First, why bother?
Here’s why it’s important to keep your credit in good shape: bad credit can result in higher interest rates on future lending that cost you thousands more for a mortgage, car or student loan. It can keep you from leasing property you want. Obviously, there’s a big payoff in becoming familiar with the basics of your credit score and report and how to keep your credit healthy.
What’s on my credit report?
Your credit report
is your record of borrowing and repaying money, including new accounts, closed accounts, unpaid bills, late bills, and other activity. It displays all of your credit accounts, including mortgages, loans or credit cards. Your credit report provides the basis for your credit score.
What goes into a credit score?
The three credit bureaus (TransUnion, Experian and Equifax) might each come up with a different number due to differences in their reports.
Payment history: Whether you pay your bills on time, including credit cards, student loans, mortgage payment, or any other lender or service provider that reports to the big three agencies.
Outstanding balances: Amounts that you owe, whether it’s your mortgage, credit card or student loans
Credit utilization: The percentage of credit available to you that you’re currently using
How long you’ve had credit: The longer your credit history, the better lenders can gauge your ability to repay
New credit: If you’ve opened new accounts recently, and lenders have inquired about your credit, it appears you’re using your credit and your score could suffer
Types of credit: The mix of accounts you hold, such as auto loans, credit cards, student loans, or mortgages. Being more aware of your financial literacy is extremely important in helping you understand your credit and manage it as well.
Now that you know more about financial literacy and how it can help you,
get your credit report & score.